How to start a business in Arizona

Editorial Team

6 min read
Santa Catalina Mountains in Arizona

Arizona ranks among the top 10 states in which to launch a business. With its lower tax policies, year-round sunshine, and fast-growing population, it’s not difficult to see why opening a business in Arizona appeals to so many budding entrepreneurs.

The state even offers free resources and tips on how to start a business in Arizona, including guides from the:

In addition, we’ve published a collection of resources for starting a small business, whether you want to launch a food stand, cleaning service, or eCommerce store.

If you’re looking for a summarized primer on how to turn your entrepreneurial aspirations into a profitable venture, use the comprehensive guide below. It covers some of the most important steps to starting a business in Arizona.

1. Research and choose a business concept

Starting a business in Arizona requires finding a ready market of customers for the products or services you hope to sell. Your small business should help solve a pain point for someone. Often, the best ideas originate from solving a need in your own daily life.

During this stage, don’t be afraid to ask friends or family members for constructive feedback about your business concept.

2. Write a business plan and acquire funding

Some entrepreneurs may be financially prepared to pay for everything out of pocket. Others secure outside funding from investors, banks, friends, or family. Either way, you’ll need a written business plan to help guide your decision-making. This document should also outline to investors how you’ll spend their money – and when they can expect a return.

3. Check business name availability and start branding

Like most states, Arizona discourages two or more businesses in the same niche from using similar names. To check if your first-choice name is still available, be sure to visit the state’s name database. When starting a business in Arizona, it’s also a good idea to run a similar search for trademarks and patents at the national level.

Once you confirm the availability of your business’s name, you can then start choosing a logo, URL, color palette, and other branding aspects for your business.

4. Determine a business structure

Every entrepreneur wanting to open a business in Arizona must choose a legal structure. The four most popular types include:

  • Sole proprietorship, in which you are the only owner. The setup process can be relatively easy. Since there is little distinction between your personal and business finances, this option provides the least legal protection in the event of a lawsuit.
  • General partnership, in which there are two or more owners. Some partnerships are simply multi-party sole proprietorships with limited legal protection, while others can be formed to offer more liability protection to all parties involved.
  • Corporation, which is the favored legal structure of larger and more established companies. This is the hardest structure to set up and maintain, though it does offer the strongest liability protection of all business entities.
  • Limited liability company (LLC), which offers the perfect blend of simplified setup and stronger legal protection. Many small business owners choose this option when starting their venture.

5. Register your business with the Arizona Department of Revenue

In Arizona, all new businesses must formally register with the state. This process used to involve filling out a physical form, but it’s now possible to complete this step online.

6. Obtain an EIN (employer identification number)

An employer identification number is the business equivalent of a personal Social Security number. The IRS uses both for tax purposes. Thanks to this online application form, it only takes a few minutes to request your EIN.

7. Acquire licenses and permits

Depending on the nature of your business or profession, you may be required to secure various certifications, licenses, or permits. Restaurant owners, for example, must pass food safety inspections. Retailers need reseller permits. Hairstylists in Arizona must also be certified and accredited.

To see what licensing requirements apply to your business type, visit the Arizona Commerce Authority or the Arizona Department of Revenue.

8. Set up employer requirements

If you plan on hiring staff, you need to set up payroll, federal and state tax withholding, paid time off, and unemployment insurance. For a more comprehensive list of employer obligations in the state, visit the Arizona Department of Economic Security or the Industrial Commission of Arizona.

9. File appropriate federal, state, and local taxes

Each business is required to report income and expenses at the federal, state, and local levels. Because corporate tax preparation is a bit more involved than personal filing, you may need to work with a certified public accountant (CPA) or professional tax preparer to help you save time and minimize costly errors.

10. Be prepared to take payments

While it’s technically possible to run a cash-only business, accepting all payment types – including purchases made via credit card, debit card, gift card, or mobile wallet – can help set you up for long-term growth. At Clover, our POS systems support all major payment types. Additionally, our POS solutions integrate with some of the most popular accounting software platforms, so that all of your expenses and sales are instantly reflected in your books – with no manual entry required.

11. Acquire a business bank account

You will need a dedicated business bank account in which to accept payments, process payroll, and pay your vendors. Having a separate bank account for your small business also makes it easier to keep corporate expenses separate from your personal ones.

12. Initialize marketing strategy and continue business development

Another step in starting a business in Arizona involves designing a marketing strategy that brings in those first customers. Paid advertising, social media, and printed flyers are all common marketing strategies used for generating traffic.

To keep those customers returning, however, you may want to create a customer engagement and loyalty program that can help form relationships and reward customers for purchases and referrals.

Hopefully we’ve helped you understand how to start a small business in Arizona – from researching potential ideas to converting your first customers. If you need help designing a payment environment that can help you run your business and boost future sales, schedule a call with a Clover Business Consultant today.


This information is provided for informational purposes only and should not be construed as legal, financial, or tax advice. Readers should contact their attorneys, financial advisors, or tax professionals to obtain advice with respect to any particular matter.

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